Tax Invoice under VAT in U.A.E

Getting Started

Tax Invoices require more details to be recorded than a simplified tax invoice. They have to be issued by all registrants for taxable supplies to other registrants, where the consideration for the supplies exceeds AED 10,000. Hence, 2 conditions to be met for issuing a Tax Invoice are:

  1. The recipient should be registered and
  2. The consideration for the supplies should exceed AED 10,000.

WHEN TO ISSUE ?

  • When can a registered agent issue a tax invoice?

Tax Invoice raised by the Agent who is registrant

  1. The agent should be a registrant
  2. Agent issues the invoice on behalf of the principal, in relation to the supply as if that had been made by the agent
  3. In this case, the principal shall not issue any tax Invoice.

What is the date of Issuance of the tax invoice to the recipient of goods or services?

The registrant raising the tax invoice should issue the tax invoice within 14 days as of the date of supply.

  • When can a taxable person issue an Electronic Tax Invoice

Electronic Tax Invoice

The taxable person may issue the tax invoice by electronic means in the following cases:

  1. The Taxable Person must be capable of securely storing a copy of the electronic Tax Invoice in compliance with the record keeping requirements.
  2. The authenticity of origin and integrity of content of the electronic Tax Invoice should be guaranteed.
  • Can a buyer issue the tax invoice for the taxable supply of goods or services?

Tax Invoice raised by the buyer

Even if the recipient of goods and services raises the invoice on behalf of registered supplier of goods and services, it shall be treated as if it had been issued by the supplier if all the following conditions are met:

  1. The Recipient of the Goods or Services is a Registrant.
  2. The supplier and the Recipient agree in writing that the supplier shall not issue a Tax Invoice in respect of any supply to which this Clause applies.
  3. The Tax Invoice shall be in the format as prescribed above.
  4. The words “Tax Invoice raised by buyer” are clearly displayed on the tax Invoice.

Note: When the Invoice has been issued by the buyer in respect of any supply, then the invoice raised by the supplier in respect of that supply shall not be deemed to be an tax Invoice.

SPECIFICS OF THE TAX INVOICE

  • What is the sequential numbering in tax invoices? Is it mandatory?

A sequential tax invoice number or a unique number which enables the identification of the Tax Invoice and the order of the Tax Invoice in any sequence is mandatory under VAT law.

  • What is Simplified Tax Invoice?

The format for the Simplified tax invoice shall be as follows:

Simplified VAT invoice for supply less than the specified amount should consider the below:

  • “Tax invoice” in a prominent place
  • Name, address & TRN of supplier
  • Date of issue
  • Description of goods or services
  • Total amount payable
  • Total VAT chargeable

  • What is Detailed Tax Invoice?

The Detailed VAT invoice for supplies above than the specified amount should consider the below:

It is issued in the case when a registered business supplies to another registered user.

This type of invoice is for wholesalers and traders dealing in bigger quantities.

  • “Tax invoice” in a prominent place
  • Name, address & TRN of supplier
  • Name, address & TRN of recipient (where they are a registrant)
  • A sequential or unique identifying number
  • Date of issue
  • Date of supply if different to the date of issue
  • Description of goods or services
  • Unit price, quantity or volume supplied, rate of tax and amount payable in AED
  • Value of any discount offered
  • Gross value payable in AED
  • Tax amount payable in AED
  • Statement relating to reverse charge if applicable.

PENALTIES

What is the Penalty for not issuing the tax invoices?

  • In case of failure by the taxable person to issue the tax invoice or an alternative document when making any supply, and
  • In the case of failure by the Taxable Person to comply with the conditions and procedures regarding the issuance of electronic Tax Invoices and electronic Tax Credit Notes,

The penalty shall be as follows:

  • 5000 for each tax invoice or alternative document
  • 5000 for each incorrect document.

Without prejudice to the provisions of Federal Law No. (7) of 2017 on Tax Procedures, the Authority shall issue an Administrative Penalty Assessment to the Person and notify the Person of the same within five (5) business days as of the date of issuance.

EXCEPTIONS 

  • What are exceptions to the issue of the tax invoice – (No tax Invoice):

Taxable person need not be required to issue a tax invoice in the following cases:

  • If there are sufficient records available to establish the particulars of supply and the supply is wholly zero- rated supply.
  • When the authority considers and determines that there are sufficient records available to establish that based on the particulars of the supply or class of supplies it is impracticable for the taxable person to issue a tax invoice.
  • Where a registrant makes a supply of goods or services through the vending machines, not required to issue a tax Invoice – recent decision.

In order to apply this decision, the registrant must keep sufficient records to establish the particulars of the supplies made, which shall contain, as a minimum:

  1. A description of the goods or services supplied
  2. The total consideration and the tax amount charged
  3. The date of supply of the goods or services

The above decision shall be applied from 01st Jan 2018 and it shall not have any effect on the date of supply or the requirement to account for tax on the supply made.

 

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